Are we on the verge of more retailer buy-outs?
30 September 2018
I WAS reading a report last week which forecast an acceleration of the current trend towards mergers and acquisitions in our industry. The gist was that on the one hand bigger companies are looking to get economies of scale and efficiency from increased sales volumes of cars, parts and finance/warranties etc and on the other smaller companies look at the costs of opening the doors for business, both now and in the years ahead, and think `It’s time to get out.’
Lo and behold we write in this week’s Agenda of Scottish-based Eastern Western Motor Group continuing its strategy of strengthening its relationship with its existing franchise partners by taking on more outlets. A few days before we ran a news alert about Stoneacre’s likely buy-out of North East-based Mill Garages which, among other things, will double its number of Volvo franchises and given the way Volvo is going, that is a very nice brand to have too.
A day or two later it was reported that auto business consultants, ASE, has teamed up with an American company, basically to help US retailers on the lookout for investment opportunities buy dealerships here just as Penske did with Sytner and Group 1 Automotive which itself has become rather acquisitive and taken over other franchises.
Nothing especially new here, it’s not exactly a `hold the front page’ moment to say that several years from now there will be fewer retailers than there are today.
It’s the rate of change though, that and the apparent opportunity to buy and sell. Analysts say the UK car retail market is relatively stable (have they heard of Brexit?) and attractive to outside buyers and especially those from America to whom sterling looks attractively weak. For smaller businesses looking at the level of investment needed as car technology changes so fundamentally you can see why some might be looking at easier ways of spending their time.
For them, now might seem a good time of getting out while the going is good. Or, as happened a few weeks ago with family-owned FCA dealer, Platts, in my native Stoke-on-Trent, if the going is not so good. In fact, if doing business is like pushing water uphill.
That the retail landscape will change over the next several years is hardly in doubt and cars will be sold through fewer but much bigger businesses. It’s just how fast that change happens which may be the front page news.